--- joanna bujes <jbujes@covad.net> wrote:

"Fact remains that as the organic composition of capital changes 
in the manufacting sector and margins shrink, profit margins in 
the "soft" information sector is where the future lies."

JG: Value creation and profit margins need to be separated here.  
The expansion of the service sector and the software market 
have certainly opened up new avenues for value creation because 
there is a lower organic concentration of capital in these 
sectors.  However, this needs to be considered across the whole 
economy - lots of start-ups burning through cash and never 
producing any use values, for example. So we can't read value 
creation from profit margins (in fact, we can't measure value 
creation at all).  The tech boom meant that capital was thrown 
at lots of enterprises that never created any value, so even with 
a favourable composition of capital the overall balance sheet 
isn't clear.

Turning to the profit margins, the question that interests me is 
the extent to which profit margins in the software sector depend 
on state protection of IP, including extending copyright terms and 
aggressively defeding US IP internationally. In other words, the 
profits achieved are not only a reflection of the value that is 
created, but also 'super-profits' from monopoly position, state 
support etc. 

This is also why we shouldn't write off 'old' industries where 
there is a high organic concentration of capital, because that 
high organic concentration of capital presents a significant 
barrier to new entrants, meaning that the old-fashioned 
capitalists can make decent profits even without too much value 
creation. I don't want to over-state this point -  of course, 
new entrants do emerge and newer technologies will make it hard 
for old capital to survive, but the steel industry is a case in 
point, where basket case businesses are now subject to multi-
billion dollar take overs.  The paper industry is my investment 
tip, by the way.

Incidentally, the UK govt procurement agency backed open-source 
today:

http://news.ft.com/cms/s/7c33cb4a-287d-11d9-9308-00000e2511c8.html

--James Greenstein